How the Tariffs are Affecting Boat Sales


How the Tariffs are Affecting Boat Sales Hawley and Smoot
Willis C. Hawley (left) and Reed Smoot as seen in April, 1929, just after Congress passed the Smoot-Hawley Tariff Act which was designed to protect American jobs.

The retaliatory tariffs that have been imposed by Canada, Mexico and the EU have had their affect on boating buildings companies across the U.S. from the largest to the smallest. Read the latest news from boating industry sources.

Last week, the European Union levied a 25 percent tariff on U.S. boats, following Mexico’s implementation of a 15 percent tariff earlier this month. And on July 1, Canada is expected to apply a 10 percent tariffs on U.S. boats. Now, just 7 days later, boat builders across the country are reporting sales to these three areas of the world have virtually stopped.

A Major Builder Reports

This week leading boating industry trade magazine, Trade Only Today, interviewed Groupe Beneteau Americas CEO George Armendariz, to ask how sales of his brands – Four Winns, Scarab, Wellcraft and Glastron, which are all built in Cadillac, Michigan, might be affected by the recent tariffs. He said, “We export a lot and if these tariffs last for an entire year, we have at risk up to 25 percent of our Cadillac-based brands. That’s on the magnitude of 1,000 units. You start translating that into effect on workforce, and we’re looking at layoffs up to 130 people. In Cadillac, Mich., that’s a lot of people. If this thing goes on more than 90 days or so, we’ll be considering layoffs.”

“Between now and Aug. 31, we’ve had every single order cancelled; we now have zero orders from Europe or Canada, and that’s a very unusual situation for us,” Armendariz is quoted as saying.

How the Tariffs are Affecting Boat Sales Grumman Boats
Marathon owns Grumman boats and several other brands that make aluminum fishing boats, pontoon boats, and canoes.

An Aluminum Boatbuilder Reports

Domestically sourced aluminum prices have increased by 27% , according to the National Marine Manufacturers Association (NMMA). In light of that, the following report from the NPR affiliate at Syracuse University seems instructive.

25% of Sales Go Overseas

Marathon Boat group has been making aluminum boats including the legendary Grumman canoes and pontoons at its factory in Marathon, New York for 65 years. CEO John Jackson says about 75 percent of their business is domestic, and the other 25 percent goes overseas.

"The worst case...it can be devastating. We're not in a position to lose 25 percent of our business. In turn, the cost of materials is going up 10 percent or more. We've already seen major increases in the aluminum market. For the first time, we had to increase our prices in the middle of the year."

How the Tariffs are Affecting Boat Sales Canoes
Grumman started making aluminum canoes in 1945 on Long Island before moving production to the Marathon factory in 1953.

Higher Prices – Canceled Orders

Jackson says they have to import certain aluminum alloys from Germany and other countries because U-S manufacturers can’t keep up due to demands from the auto industry. He says the confluence of higher costs and pending tariffs is starting to have an impact. Jackson says a European client told him earlier this month they were cancelling a large order.

"They said with the new duty that will be implemented, it would increase their cost by 25 percent, and there's no way they're going to order the product if that in fact became a reality."